Friday 15 December 2017

Airline traffic drop ‘worst ever’: IATA

Andrea Rothman

Airline passenger traffic fell the most ever last year and a recovery in demand in recent months has yet to translate into higher fares, the International Air Transport Association said.

Traffic, a measure of passengers flown multiplied by distance travelled, dropped 3.5pc, with declines exceeding 5pc in Europe, North America and the Asia-Pacific region, IATA, which represents 230 carriers, said in a statement today.

“The industry starts 2010 with some enormous challenges,” Giovanni Bisignani, the organization’s chief executive officer, said in a statement. “Revenue improvements will be at a much slower pace than the demand growth that we are starting to see. Profitability will be even slower to recover.”

While yields, or revenues per passenger, have begun to improve after airlines slashed capacity, they’re still 5pc to 10pc below 2008 levels, IATA said. That suggests airlines are struggling to raise fares even as demand begins to pick up.

The recession and credit crisis have cost carriers 2 ½ years of growth in passenger markets and 3 ½ years in the airfreight industry, so that 2010 will be “another spartan year” of cost controls and capacity caps, Bisignani said.

Global losses will amount to $5.6bn this year, IATA reiterated, after a deficit of about $11bn in 2009.

While the industry’s worst loss to date was almost $13bn in 2001 following the September 11 terror attacks, an $80bn revenue decline last year was “vastly bigger” than anything previously experienced, IATA Chief Economist Brian Pearce said in a telephone interview. Net losses were limited only by a decline in oil prices, he said.

December gain

Passenger traffic increased 4.5pc in December compared with a year earlier, IATA said today, led by gains of 19pc in the Middle East and 8pc in Asia. Traffic shrank 1.2pc in Europe and 0.4pc in North America.

IATA will deliver its next earnings forecast for the airline industry in March.


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